Washington State Medicaid and MACRA Hello, good afternoon. Thank you. Today I’ll be presenting on how Washington State is approaching advanced payment models (APMs), and what MACRA’s Advanced APM program might mean for this state-led work. MaryAnne Lindeblad Medicaid Director NAMD Fall Conference November 7, 2016

Washington State Medicaid Program Purchases health care for close to 2 million people through Medicaid (Apple Health) through 5 MCOs $8 billion annual spend Federal program participation: - State Innovation Model (SIM) Round 2 Health Homes/Dual Eligible Medicaid Transformation Demonstration Project (agreement in principle) First I’d like to start with a high-level overview of Washington’s Medicaid’s program: Medicaid, our Apple Health program, covers almost 2 million people. Thanks to the Affordable Care Act, Medicaid enrollment has increased by 600,000, since 2012. Medicaid spends approximately 8 billion annually We - the Medicaid program and the entire state – participates in many federal programs and initiatives: We received $65 million for health transformation under the SIM Round 2 grant. We have a Health Homes demonstration grant We have an agreement in principle for a Medicaid Transformation Demonstration Project. We are currently negotiating the Special Terms and Conditions.

HCA purchasing goals (Medicaid and Public Employees Benefits Program) By 2021: 90 percent of state-financed health care and 50 percent of commercial health care will be in value-based payment arrangements (measured at the provider/practice level) (2c-4b in CMS Learning Action Network APM Framework) Washington’s annual health care cost growth will be below the national health expenditure trend. The Washington State Health Care Authority administers our Medicaid program and the Public Employees Benefits program. In total, HCA purchases for 2.2 million people statewide. HCA has the following purchasing goals: By 2021: 90 percent of state-financed health care and 75 percent of commercial health care will be in value-based payment arrangements (measured at the provider/practice level) (2c-4b in CMS Learning Action Network Alternative Payment Model Framework) Washington’s annual health care cost growth will be below the national health expenditure trend. In partnership with purchasers, providers, and payers, Washington will: Leverage its purchasing power to move 90% of its health market from “fee for service” to value-based payments. Test, improve, and bring to scale shared savings and cost of care models. Implement Medicaid payment and delivery models that support full integration of physical and behavioral health.

HCA and Medicare’s VBP goals 2021 90% state-financed 50% commercial Washington’s goals fit within a national movement away from FFS and towards value-based payments CMS aims to see 50% of Medicare payments linked to quality by 2018 In addition to moving 90% of state-financed health care into value-based payments by 2021, we aim to drive value-based payments in the commercial market to 50%. 2016 30% In 2016, at least 30% of Medicare payments are linked to quality and value through APMs 2021 90% 50% In 2021, at least 90% of state-financed health care payments and 50% of commercial health care payments are linked to quality and value through APMs (Categories 2c-4b) 2018 50% In 2018, at least 50% of Medicare payments are linked to quality and value through APMs

Defining Value-Based Payments using HCP-LAN Alternative Payment Model Framework Since our purchasing goal aligns with the Medicare goals, we have also adopted the CMS Alternative Payment Framework, so we are all speaking the same language and sending the same signal to the delivery system and commercial and Medicaid payers when we talk about our paying for value goal and what that means. We made the decision to use the framework in how we define and reward VBP attainment. As I mentioned, our definition of value-based payment is LAN Categories 2C-4B. Earlier this year, Medicare (the US Dept of Health and Human services) launched the Health Care Payment Learning and Action Network - LAN for short - to help advance the work being done across sectors to increase the adoption of value-based payments and alternative payment models. The LAN consists of private payers, providers, employers, state partners, consumer groups, individual consumers, and many others to accelerate the transition to APM. The LAN has created a APN Payment Framework, which is shown on this slide, so to provide common definitions and agreement around APMs. There are 4 categories – shown here, moving from Category 1, or fee-for-service payments with no link to quality, to Category 4, or population-based payments. While there are many different types of alternative payment models throughout the continuum, this framework helps create a common language around value-based payments https://hcp-lan.org/groups/apm-fpt/apm-framework/

HCA Value-based Roadmap Reward patient-centered, high quality care Reward health plan and system performance Align payment and reforms with CMS Improve outcomes Drive standardization Increase sustainability of state health programs Achieve Triple Aim 2021: 90% VBP HCA in June 2016 produced a HCA VBP Roadmap. This Roadmap braids together our payment and delivery reform initiatives under our State Innovation Model grant, the Medicaid Transformation Demonstration Project, and other efforts. The Roadmap articulates our path to value-based purchasing to 2021 across Medicaid and our Public Employee Benefit Program: For all WA payment and delivery reform initiatives, we seek to: Reward delivery of patient-centered, high value care and increased quality improvement Reward Medicaid and PEBB health plans and health systems for performance Align reform approaches with CMS Drive standardization based on evidence Increase long-term financial sustainability of state health programs; and Continually strive for the Triple Aim of better care, smarter spending, and healthier people Our Value-based Road Map will be continuously updated over time. HCA’s interim purchasing goals and key VBP milestones along the path to 90 percent in 2021 are: 2016: 20% in VBP 2017: 30% 2018: 50% 2019: 80% 2020: 85% 2021: 90% 2019: 80% VBP Medicaid PEBB 2016: 20% VBP

Medicaid is in the process of making significant changes to Medicaid contracts, starting in January. It will be a risk-based contract, where providers and MCOs will held accountable for attainment of quality and VBP goals. MCO contracts will require that a growing portion of premiums be used to fund direct provider incentives tied to attainment of quality. HCA will withhold an increasing percentage of plan premiums, to be returned based on achieve a core subset of metrics from the statewide common measure set. Through use of time-limited funding under the Medicaid transformation demonstration project, MCOs will be able to earn financial incentives for achieving annual VBP targets. MCOs accountability for each of these new contract components will grow progressively year after year. Unique to the VBP incentives, Medicaid will create a “challenge pool” to reward exceptional MCO performance and a “reinvestment pool” to provide similar regional incentives for exceptional performance attributable to the broader participants in an ACH. These Challenge and Reinvestment Pools relate specifically to quality measures, and while they might correspond with VBP contractual arrangements with providers, they are in fact separate Unearned VBP incentives from the waiver and uncollected withhold payments from managed care premiums will be made available in a challenge pool that rewards MCOs that meet an exceptional standard of quality and patient experience, based on a core subset of measures. Funded similarly to the “challenge pool,” the reinvestment pool uses unearned ACH VBP incentives and a share of unearned MCO incentives to provide meaningful reinvestment in regional health transformation activities, based on performance against a core subset of measures. This provides a continuing incentive for multi-sector contributions to health transformation and rewards the delivery system and supporting organizations for achieving quality and improved patient experience. These details are presented in the HCA VBP roadmap, which can be found on HCA’s website.

MACRA Alignment Efforts, 2017 - 2019 Made decision to utilize CMS LAN framework for VBP attainment and provider incentives in 2014 Align VBP efforts under Wavier with provider incentives under Advanced APM track Seek ‘other Advanced APM’ designation for WA Medicaid and other HCA APMs, for 2019 Align other Medicaid transformation efforts (waiver, SIM) with MIPS efforts, i.e., harmonize WA common measure set with MACRA Assist providers with the transition to VBP payments (through WA Practice Transformation Hub) All of the efforts I outlined were developed prior to the MACRA rules were released the end of March. Over the next couple of years we aim to align Medicaid purchasing with MACRA as much as possible. In 2014 we made a decision to utilize the federal framework in how it defines and rewards VBP attainment. We’ve been actively working on other MACRA alignment planning efforts, to begin in 2017. At a high-level, we will: With encouragement from CMS, we are aligning VBP efforts under Wavier with provider incentives under Advanced APM track Seek ‘other Advanced APM’ designation for WA Medicaid APMs – that outlined in the last 2 slides Align other Medicaid transformation efforts with MIPS efforts, including harmonizing measures, shared decision making, and other initiatives. In the nearer term, we will ramp up efforts to assist providers with the transition to VBP payments through our Practice Transformation Hub. We want to enable providers to leverage as much as possible under MACRA. In terms of challenges, we haven’t encountered any barriers so far. We look forward to hearing more guidance from CMS about the process to designate Medicaid Advanced Alternative Payment Models as other payment models. We agree with NAMD, we desire a streamlined process for state Medicaid programs.

Questions? For more information: www.hca.wa.gov/hw MaryAnne Lindeblad HCA Medicaid Director Maryanne.lindeblad@hca.wa.gov Tel: 360-725-1863 This is a link to our Healthier Washington page, which includes more information on our Medicaid Transformation Demonstration Project, HCA VBP Roadmap, and other initiatives. I’m happy to answer any questions.